The 6 limiting factors of every business

The 6 limiting factors of every business

This is a concept that has helped many thousands of people – from all around the world – take their businesses to the next level. And I want to do the same for you too. If fact, if you run your own business (or aspire to run one in the future), I want to make this article is one of the most important one you’ll ever read.

I’m not usually one to make big statements like that but I mean it. I want to share with you what I call..

The 6 Limiting Factors Of Business

Understand, this may be a little longer than you’re used to but that’s only because it’s jam-packed with value that can help you start, or grow, your business.

No matter what business you are in, the success of your business is currently being limited by these 6 factors. EVERY business is limited by one of these 6 factors. This includes my business. Your business. Everyone’s business. Yet, most people in business aren’t even aware of these 6 factors. I want to give you the ultimate advantage here today.

So, what are these 6 limiting factors?

1. Production2. Distribution3. Team4. Finance5. Marketing6. Demand

Before we go deeper into how these 6 factors affect your business, let me clarify that no matter whether your business is online, offline, or both and no matter whether you a product-based business or a service-based business either way, ALL 6 factors apply to your business (which will become very clear to you in just a moment)

Let’s go through them.. (and how you can use this to grow your business)

1. Production
Production is your ability to produce a valuable, sell-able product that you can then take, sell & distribute to customers. Production includes your; factories, warehouses, patents, other intellectual property, the product itself, equipment, computers & software, automation. Essentially anything that’s required for you to produce your product falls into this first category.

2. Distribution
This is your ability to get your product into the hands of your customers. If your an offline, product-based business, this may be, a number of delivery trucks you have & how effectively they deliver your products. Or if you’re the e-commerce giant, Amazon. How many hi-tech delivery drones do you have flying around, in the sky, delivering products to customers (something they are still developing btw)

Now, if you’re an online business, you may be thinking to yourself, ‘John, I don’t need distribution, I have the beautiful thing that people call the internet. This doesn’t apply to me.’ Think about this for a moment..

What if all your web pages, online sales processes & servers crashed for 10 long hours. How many sales will you make during that time? And many people would be able to access your product/service? Those 10 hours probably won’t be as ”financially lucrative” as your business usually is, huh?

Your servers, web pages & online systems are your DISTRIBUTION.

They are the tools that allow you to distribute your products/services to your customers. I don’t want to bang on about this, but once again, EVERY one of these 6 LIMITING FACTORS applies to EVERY business out there.

Next one..

3. Team
This includes; yourself as the business owner, your employees, your suppliers, your business partners, your affiliates, your board of directors, your mentors & advisers, etc. They all fall into this 3rd category, Team. In a moment I’ll talk about how these 6 factors apply to you & your business, but before I go into that, let me cover the other 3 factors.

4. Finance
This is your access to capital. The finances you need to run & expand your business. If you don’t have the running capital to run your business, your business will be limited in it’s current & future success. Finance – that’s the 4th factor.

5. Marketing
Your ability to actually communicate your business – and your products/services – to your customers & potential customers. How do you communicate the value that you bring – your products & services – to your customers? And through which channels do you communicate your message to customers?

How are you getting people to pay attention to you, your business, your products, your services & your brand? That all falls under marketing.

And the last one..

6. Demand
Is there an actual demand for your products & services? Are you in an industry, offering products, that are financially lucrative? If you’re in the floppy disk business, your demand is probably very low compared to a decade or two ago. That’s going to limit your business, unless you find a way to take into greater customer demand.

Those are the 6 limiting factors..

1. Production2. Distribution3. Team4. Finance5. Marketing6. Demand

Now, here’s the really important part. So pay attention to this.

The size of a business is directly proportional to the lowest of those 6 limiting factors. Let me repeat that..The size & success of a business is equal to the lowest of the 6 limiting factors.

Not the highest of the 6. But the lowest. Think about it for a moment.

If a business has great production facilities, expansive distribution, an incredible team, plenty of financing available, world-class marketing but has NO DEMAND.

Meaning, nobody actually wants the products that the business offers. How successful will that business be?
Not very successful. (unless, again, it finds a way to tap into greater demand)

What about if a business has plenty of demand (everybody wants the product), top class marketing, a great team behind the company, plenty of financing, expansive distribution – but NO PRODUCTION.

Meaning, the business doesn’t have the ability to produce the product it wants to sell. How successful will that business be? Probably not very successful.

(unless, again, it finds a way to solve the production issues in the business)

The size of your business is equivalent to the lowest of the 6 factors. Hence, our goal is to build up the 6 factors of our business in equilibrium.

If you have $10 MILLION/year worth of products being produced, but you only have $1 MILLION/year worth of demand – you have a problem.

Equally, if you are generating $15 MILLION/year worth of new customers through your marketing,
yet your only producing $3 MILLION/year worth of products, you’re you losing out on a lot of potential revenue.

It’s about growing the 6 limiting factors in equilibrium. With that said, it takes different skills to develop each of the 6 factors. There are particular skills you must develop to expand that factor of your business, and therefore expand your business.

For TEAM, we must develop our leadership, communication & teamwork skills.
For MARKETING, we must develop our skills of influence, market research & persuasion.